15 June 2015 – Expansión
La Zagaleta is regarded as the most luxurious residential development in Europe / The complex in Marbella, which has 235 homes, tripled its profits in 2014 to €10 million.
In just 900 hectares of land nestled in a Mediterranean forest a few kilometres from Marbella, and guarded by the highest level of security, the residential development of La Zagaleta hides a real estate oasis to which only a few wealthy individuals can aspire.
The Chairman of the company, Oswald Grübel, estimates that the 235 mansions that comprise the residential development are worth €1,800 million at market prices, although that figure increases to €3,000 million if we include the golf courses and other facilities at the site, which is linked together by a 60km-long internal road.
Considered the most luxurious and exclusive urban development in Europe, La Zagaleta is located in the middle of the Golden Triangle – between Marbella, Benahavía and Estepona – the area where the real estate recovery has started in Spain, driven by the pull of international investors.
Grübel, a former CEO of the Swiss bank UBS, took over the reins in 2013, after the Chairman and founder, Enrique Pérez Flores, decided to stand down from his role, at the age of 90. Last year, the company reported record sales of €40 million and tripled its net profit to €10 million. One of the drivers (behind these results) was the sale of several plots of land to a US fund, whose identity has not been disclosed for confidentiality reasons.
An agreement has been made with that fund to manage its assets, i.e. to build villas (on the acquired plots) and then sell them. The contract provides for the construction of the first two (villas) through a joint venture, on which work will begin this year; and then to build several more (villas) over the next five years, although that figure may increase.
According to Jacobo Cestino, CEO of La Zagaleta, in 2006, a strategic decision was taken for the firm to develop the land, in order to generate higher margins and so it reserved all of the available land. “Homes may end up forming part of the stock for a year and a half. That is a risk we run, but the reality is that we have sold properties that have not even been completed”. Thus, this year, the company will invest €15 million in three new mansions, whose market price will be around €40 million.
Cestino also revealed that the company is considering corporate operations, “because our aim is to grow and export our brand. We are analysing operations to form partnerships overseas on a daily basis. We expect to finalise at least one purchase between now and the end of the year”.
In La Zagaleta, around 150,000 m2 of land is occupied, although the buildability ratio is reduced to 15%. Thus, there is still 200,000 m2 available, divided into 185 plots. In terms of rotation, Cestino indicates that “there is still quite a lot”. In recent years, there have been 8 or 9 re-sales per year on average.
Original story: Expansión (by Lidia Velasco)
Translation: Carmel Drake